INVESTMENT IN REAL ESTATE BY NON RESIDENT

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DR GAURAV GUPTA FCA, FCS, LL.B (Querist)
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27 September 2009 DEAR ALL
I HAVE INCORPORATED AN INDIAN COMANY WITH NRI DIRECTORS AND SHARE HOLDERS WITH THE INTENTION TO BUY A PROPERTY IN GOA NOW A FOREIGN COMAPNY WANTS TO BUY 99% SHARES OF MY INDIAN COMANY AND OUT OF THAT FUNDS INDIAN COMAPNY WILL BUY THE PROPERTY, FUNDS HAVE BEEN BROUGHT IN TO INDIA NOW WHAT ARE THE REQUIREMENTS OF FEMA REGARDING THIS CAN WE UTILIZE THE FUNDS AND INVEST IN PROPERTY AND LATER INFORM THE RBI ?
PLZ REPLY ITS URGENT

CS Vivek Hegde

CS Vivek Hegde (Expert)
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30 September 2009 Kindly appreciate FDI is not allowed in Real Estate sector....

Following are exracts of Master Circular...

(i) Foreign investment in any form is prohibited in a company or a partnership firm or a proprietary concern or any entity, whether incorporated or not (such as, Trusts)which is engaged or proposes to engage in the following activities2:
(a) Business of chit fund, or
(b) Nidhi company, or
(c) Agricultural or plantation activities, or
(d) Real estate business, or construction of farm houses, or
(e) Trading in Transferable Development Rights (TDRs).
(ii) It is clarified that â€œreal estate businessâ€ does not include development of
townships, construction of residential / commercial premises, roads or bridges
educational institutions, recreational facilities, city and regional level infrastructure,townships. It is further clarified that partnership firms /proprietorship concerns
having investments as per FEMA regulations are not allowed to engage in print Media sector.

regards

Vivek

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